Column: Burchall “Nanci Is The Real Issue”

April 15, 2015

[Opinion column written by Larry Burchall]

BERMUDA'S DEBT FACT IN ONE GO

Once you’ve studied the chart, you should be able to work out all of Government’s strategic management problems. If not, here is a set of facts – just facts – that will help you see and understand.

Fact One – Few people talk about this. “This” is the obvious and large – humongous, even – over 790% growth in Nanci in the ten year span shown. Nanci acts like a set of dollar-gobbling cells in the Government’s Tax Revenue artery.

Fact Two – By 2017/18, Government Tax Revenue is projected – by the Minister – to be only $59.2m or 6.4% higher than ten years before in 2007. However, Nanci gobbles up that entire $59.2m increase. Then Nanci gobbles up another $125.2m on top. This huge Nanci bite-off or erosion is the core issue.

Fact Three – Government’s 2007 to 2017 tax revenue is actually flat-lining [averaging around $940m]. Nanci is gobbling up a continuously increasing proportion of these flat-lining tax dollars. In 2015/16 Government will end up with only $761m to spend on the same range of Personnel, Operations, and Capital that it was spending $905m on in 2007. So, in 2015/16 and relative to 2007/08, Government will end up with $144m fewer leftover dollars.

Fact Four – Globally and locally, and confirmed by Government’s Consumer Price Indexes, prices and costs have risen since 2007. To match the buying power that $905m had in 2007, in 2015, Government would require $905m x 1.22 in 2015 dollars. That comes out to $1,105m needed in 2015 – and that’s just to match the buying power of the $905m in 2007.

Fact Five – From Fact Four, it’s clear that in 2015, when compared to 2007, Government comes up $481m short on value or buying power. Add that $481m, and Government’s buying power relative to 2007 becomes the same.

Fact Six – What the chart displays has been going on in Government finances at these high dollar volumes since 2010. Up to 2009, with Nanci still under $40m, the matter was manageable and could easily have been brought under control.

Fact Seven – What bedevils us today is a direct consequence of the loss of financial control that began in 2010 – the year that Nanci leapt from under $40m to $82m. This suddenly much bigger Nanci combined with weak and weakening top financial management. Effectively, Government finances have been out of control since 2010.

Fact Eight – Between 2014/15 and 2017/18, according to the February 2015 Budget Statement, Nanci is projected to rise from $161.2m in 2014/15 to $184.4m in 2017/18. So Nanci’s rise is accelerating.

Fact Nine – For 2017/18, the Minister for Finance projects Tax Revenue around $988m. That means taking in only $59.2m more than in 2007/08. By 2017/18, when compared to 2007/08, Nanci will have grown from $23.3m to $184.4m; thereby costing a further $161.1m. So in 2017/18, Government will only have $803.6m left after Nanci’s gobble-up. That’s still $100m fewer dollars than in 2007, with those 2017/18 dollars having much less buying power than those 2007/08 dollars! That’s wrong way arithmetic!

Fact Ten – Despite all the talk, press and Ministerial statements, expressions of sincere intent, and real evidence of real effort, the arithmetic still shows that Government is not getting ahead. Government is not making any real financial progress. Five years after losing control in 2010, year-on-year, Government is doing the same thing and, year-on-year, Government is getting the same steadily worsening result.

I hope I’ve cleared away the fog created by the brouhaha surrounding the 2015/16 Budget and all the Parliamentary procedure and parking lot screw-ups since.

Conclusions and observations

Nanci is the issue. Government must control Nanci. Controlling Nanci means reducing borrowing. Reducing borrowing means making major cuts. Government has not yet made any major cuts. So Nanci will continue to grow, clog the tax artery, and erode or gobble up taxes before those tax dollars can be re-spent.

The numbers show that ever since 2010, five years ago, Bermuda has been steadily and consistently burrowing itself deeper and deeper into a Debt hole that Bermuda began digging, and digging seriously, in 2010.

Nanci, is the fact to understand. Nanci must be dealt with. Nanci is the issue. If Government does not make major cuts, the Government will simply and absolutely ‘burrow’ its way, taking us with it, into a deeper hole from which there can be no escape for decades.

Study those numbers. Wrap your mind around those numbers. Those numbers are not lying to you.

Nanci! It’s Nanci!

- Larry Burchall

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Comments (7)

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  1. bagheera says:

    whatchew say willis?

    • Zombies Now says:

      Mr. Burchall the OBA Zombies are still falling on their swords……but you have still failed as usual to address how Bermuda can generate alternative Revenue Sources…….while there needs to a certain level of Cuts……the problem remains…..CUTS, CUTS & more CUTS IS NOT THE ONLY SOLUTION AS YOU PUT FORWARD…….the average man feeling the pain the most will Revolt. Bermuda will be faced with more social upheaval thanever…..this you seem to overlook each weak…….the human factor does matter……

      The Government must seek alternative ways to grow our economy. ….join Collaboration is one way forward from all key stakeholders. ……..

      • Controlling Nancy Now says:

        Nanci must be addressed via a joint Collaboration effort Government, Opposition and Key Stakeholders. ….Nanci needs attention and careful analysis….Political Swords must be put down for the sake of Bermuda. ……Nanci is out of control as she is ignored by the government as they usually ignore most things. …….

        But…..Looks like the alternative ideas OBA said they had pre-election, are not so after all, if they do borrow again…..they have done the same thing….smh. ..

        Nanci is not significant to your OBA Burchall……but keep screaming. ….might hear you when they are drowning and too deep in the water to be saved. ….

      • Creamy says:

        Betty, you never did understand the meaning of the phrase “falling on their swords”, did you.

  2. Alvin Williams says:

    The numbers versus the people; yes it’s all about the numbers; but behind the numbers is the people and their families; The consequence of economic distabilization not just for individuals but hundreds of Bermudian families. Yes the type of action undertaken to bring down the government debt may bring relief in that department; but who will pay the full price and who are we saving Bermuda for?
    I keep on hearing that government is to big and should get rid of it’s employees? But what is not said with an unemployment rate of close to four thousand Bermudians unable to find work; what is to become of the hundreds more added to the unemployment line? You really think that you are going to have a stable peaceful country while the rest of us are waiting for manna to fall from the heavens in the form of foreign investment and the thousands of foreign workers that is suppose to boost Bermuda’s economy? Bermuda is not Greece or Portugal who are going through similar economic upheaval; because those countries have one thing that Bermuda does not have and I am not talking about economic resources; I am talking about the make up of the people. They are for the most part a single nationality and when they get angry they get angry at their government. In Bermuda we have the potential for even sharper social conflict. We are not a single nationality; we are divided by race; by nationality and as Bermuda continues to economically decline those fissions will come even more to the fore. It’s alright to talk about the numbers; but we have to be careful how we operate on the patient; for there is great potential for that patient Bermuda to die on the table.

  3. Another great article Mr. Larry Burchall…More importantly, it’s a fact/s!
    (Sort’a like being in quicksand, “the more one wriggles the deeper they’ll sink.”)

  4. sswhite says:

    Larry you cant use “projections” in a “fact” based report. The moment you you use “projections” the report becomes at best an “estimate.” Forward looking “projections” are subject to change, these forward looking projections are used by companies filing to the SEC on a daily basis – it is quite a useful tool in that if they do not meet those “projections” they are not liable for fraud or “misleading” Where is your MBA from BTW?

    Unlike you I am not retired and have little time to stew around government financial statistic but believe me if I did I could blow holes in your “facts” to expose the true underlying “rot” the global economy.

    Here is a clue…rymes with smivate panking…